Deposit and Down Payment
In Indonesia, a contract deposit (Tanda Jadi) is required when signing an apartment or buying a car, which is shortened to DP, meaning a deposit required by credit card or cash before checking into a hotel.
In Indonesia, the DP (day payment), which is the deposit for the purchase of services, is classified as Advanced Payment from the accounting point of view of the service provider, while it is classified as Down Payment from the service provider's point of view.
Down is an expression from the purchaser's point of view in the sense of "reduce the debt", but for the accounting treatment of the service provider, it is a debt to the customer, and the payment of the advance to the service provider is a receivable.
Receipt of Down Payment from customer
The advance payment from the customer is processed in the Down Payment account when the invoice is issued and transferred to Sales with the certificate of receipt from the customer (Surah Terima Berita Acara), but the journalization method is different between the Completion Basis and the Percentage of Completion Basis.
- Issued an invoice with an upfront payment of 100, 50% of the order price
A receivable (A/R) is generated for the customer, and Down Payment is recorded in the credit account based on the type of transaction (advance).- Dr. A/R 100 Cr. Down Payment 100
- Received a certificate of receipt of 25% completion from the customer
In the case of the construction progress standard- Dr. Down Payment 50 Cr. Sales 50
In the case of the construction completion standard
- No journalization.
- Received a certificate of receipt of 50% completion from the customer
In the case of the construction progress standard- Dr. Down Payment 50 Cr. Sales 50
In the case of the construction completion standard
- Dr. Down Payment 100 Cr. Sales 100
- Receive a certificate of receipt from the customer for 100% completion
The construction progress standard and the construction completion standard are the same.- Dr. A/R 100 Cr. Sales 100
Since it is recorded as Down Payment at the time of invoice issuance for advance payment and transferred to Sales when the work is completed, there is a mismatch between the amount of invoice issuance (A/R recorded) for the relevant month and Sales in the accounting.
Payment of Advanced Payments to customer
Basically, the reverse pattern of Down Payment will occur, but if you transfer the money first without an invoice, and receive the invoice collectively at the time of completion of service receipt, A/P will not occur, the accounting system will be managed in the general accounting (G/L).
- 100 advance payment to a customer.
Since no invoice is received and no debt is incurred, Advanced payment is recorded from the G/L.- Dr. Advanced Payment 100 Cr. Bank 100
- A/P recorded on arrival of invoice
A/P will be recorded at the time of receipt of the invoice in full, including advance payments.- Dr. Service expense 500 Cr. A/P 500
- offset processing
Offset the A/P against the prepayment.- Dr. A/P 100 Cr. Advanced Payment 100